ALBA Docs

PETROCARIBE AGREEMENT OF ENERGETIC COOPERATION BETWEEN THE GOVERNMENT OF THE BOLIVARIAN REPUBLIC OF VENEZUELA AND THE GOVERNMENT OF THE CO-OPERATIVE REPUBLIC OF GUYANA

The Government of the Bolivarian Republic of Venezuela and the Government of the Co-operative Republic of Guyana.

Considering the creation of PETROCARIBE, on 29th June 2005, as an organism facilitator of policies and energetic plans, aimed to integrate Caribbean peoples through the sovereign use of natural and energy resources, in direct benefit of its citizens;

Reaffirming the close friendship and cooperation ties existing between the Government of the Bolivarian Republic of Venezuela and the Government of the Co-operative Republic of Guyana;

Acknowledging the indispensability of actions of cooperation and solidarity between the Government of the Bolivarian Republic of Venezuela and the Government of the Co-operative Republic of Guyana, and their essential nature in order to achieve our mutual objectives of socio-economic progress in a setting of peace and social justice;

Recognizing the need to adapt to the changing conditions of the hydrocarbon markets;

Agree to execute the “PETROCARIBE Agreement of Energetic Cooperation”, specified as follows:

Article I

The Government of the Bolivarian Republic of Venezuela will directly provide the Government of the Co-operative Republic of Guyana with crude, refined products and LPG (Liquified Petroleum Gas) or its energetic equivalents, to a monthly average of five thousand and two hundred barrels per day (5.200 b/day). The supply will be subject to evaluation and adjustment according to the evolution of the acquisitions made by the Government of the Co-operative Republic of Guyana, the availability of the Government of the Bolivarian Republic of Venezuela, the decisions adopted by the OPEC (Organization of Petroleum Exporting Countries), and any other circumstance that may force the Government of the Bolivarian Republic of Venezuela to adjust the quota allocated through this Agreement. The quantities specified in the present Agreement will override those stipulated by existing agreements on energetic matters between the Government of the Bolivarian Republic of Venezuela and the Government of the Co-operative Republic of Guyana.

The Government of the Co-operative Republic of Guyana will take part in the application of the present Agreement, solely in those aspects and circumstances under which their participation is coherent with existing obligations they may have at regional and international level.

Article II

The supply provided by the Government of the Bolivarian Republic of Venezuela to those public entities designated by the parties, in accordance with this Agreement, will be subject to the commercial policy and practice of PDVSA (Petroleum of Venezuela, S.A.), who will regulate the supply, according to the quota established by the Government of the Bolivarian Republic of Venezuela. At the request of the National Executive, PDVSA will administer any application on the basis of the quota established in this Agreement.

Article III

The Government of the Bolivarian Republic of Venezuela, in conformity with the supply quota established by the present Agreement, will make available financing schemes under the following conditions: a grace period of two (2) years for the repayment of capital, and an annual interest rate of two per cent (2%). The amount of applicable financial resources and the financing period will be determined according to the following scale:

Current purchase prices (FOB-VZLA) per barrel (USD)

Determining factor of financial resources (%)

Financing period (years)

>15

5

15

>20

10

15

>22

15

15

>24

20

15

>30

25

15

>40

30

23

>50

40

23

>100

50

23

The Government of the Co-operative Republic of Guyana will be invoiced on the basis of the international market’s current referential prices.

The share requiring full payment must be paid within ninety (90) of issuing the Bill of Landing. No interest will be applied to the first 30 days of this period. An annual interest rate of 2% will apply to the remaining 60 days of this period. The Government of the Bolivarian Republic of Venezuela reserves the right to present shipments to the port of entry, in which case the financing will only cover the product’s value (FOB-VZLA), while the cost of chartering must be paid in full immediately following unloading.

When oil prices exceed $40 per barrel, the repayment period will increase to 23 years, plus a grace period of two years, totaling to a total repayment period of 25 years, and reducing the interest rate to 1%. With regards to the share to be settled by deferred payment, the Government of the Bolivarian Republic of Venezuela may accept payment in specific assets, to be mutually determined, for which the Government of the Co-operative Republic of Guyana will offer preferential prices.

The products acquired by the Government of the Bolivarian Republic of Venezuela at preferential prices may include the specific assets that the parties approve, and may be affected by the commercial policies of wealthy countries.

Article IV

Interest repayment and asset amortization related to debts contracted by the Government of the Co-operative Republic of Guyana may take place through the use of mechanisms of commercial compensation, if and when required by the Government of the Bolivarian Republic of Venezuela.

Article V

To the effects of this Agreement, the turnover financed by the Government of the Bolivarian Republic of Venezuela will be dedicated to the Co-operative Republic of Guyana’s internal consumption. Turnover will be ratified on every occasion by the Government of the Bolivarian Republic of Venezuela.

Article VI

It is expressly agreed by the signatory parties of this Agreement that to the effects of financing, and in applicable circumstances, the aggregate turnover specified by the Agreement of San Jose and the present Agreement of Energetic Cooperation, shall not exceed the Co-operative Republic of Guyana’s internal consumption.

Article VII

The turnover resulting from the application of the present Agreement will not have any effect on the financing mechanisms established by the Agreement of San Jose, since they are different instruments of cooperation. In this respect, the Government of the Co-operative Republic of Guyana will notify PDVSA of the volume of sales required within the context of the present Agreement.

Article VIII

The Government of the Bolivarian Republic of Venezuela, by means of the Ministry of Energy and Oil and PDVSA, will be the executant of this Agreement, responsible for the establishment of any mechanisms and procedures required for its implementation.

Article IX

The present Agreement will come into force following the ratification of this instrument, and will remain in force for a period of one (1) year, being automatically renewed for equal and successive periods.

The present Agreement may be amended or abrogated when its is so required by the Government of the Bolivarian Republic of Venezuela. In this event, the Government of the Co-operative Republic of Guyana will be notified in writing and by diplomatic means, with thirty (30) days notice. Any query or controversy arising from the interpretation or implementation of the present Agreement will be resolved by the direct negotiations of both parties, through their diplomatic bodies.

Article X

It is expressly agreed by the signatory parties that the present Agreement is an extension of the Caracas’ Agreement of Energetic Cooperation, subscribed by the Government of the Bolivarian Republic of Venezuela and the Government of the Co-operative Republic of Guyana on 19th October 2000. In this respect, the dispositions established in articles FIRST and FOURTH of the present Agreement substitute articles FIRST and FOURTH of the Caracas’ Agreement of Energetic Cooperation, subscribed on 12th December 2001.

Subscribed in the city of Montego Bay, Jamaica, in two copies of equal content, in Spanish and English, on 6th September 2005.

On Behalf of The Bolivarian On Behalf of the Government of TheRepublic of Venezuela Co-operative Republic of Guyana